Business Liquidity Public Markets

Morning Report: Here’s One Chart That Helps Explains 2017’s Weak IPO Cadence

Morning Report: As 2017 grinds along, and the hoped-for IPO wave increasingly looks like a ripple, we should look to returns to understand why investors may be blasé about new offerings.

It is not shaping to be a strong year for tech IPOs. Snap continues to melt, Blue Apron’s fall still shocks, Tintri remains blah-negative at best, and Mulesoft continues to take hits. At the very least, this will disappoint the hopeful who hoped for a material liquidity cycle that could unpack quite a lot of private wealth.

It was not to be. And, worse, 2017’s public debut cadence follows several lacking years. In short, tech’s IPO cadence has been slack for a while now.

But, instead of doing what we normally do — weighing rumored, impending offerings and trying to divine when some very-ripe players might drop an S-1 — let’s look at the market in a different way.

The folks over at Bespoke Invest dropped a chart this morning that may be illustrative. It shows returns since around 2009 for the DJIA, Nasdaq, and the Bloomberg IPO index.

Can you guess which one is in last place?

What’s thrilling about the chart is that it shows that the tech-heavy Nasdaq has soundly beaten the IPO index. We can see this, albeit only partially, and dimly, in the disconnect between the performance of the Big 5, tech’s largest companies, and the smaller firms that comprise recent, lackluster IPO crops.

Perhaps it is less surprising than we might have thought that investors aren’t jumping at new IPOs when there are returns available with safer — for now — companies.

From the Crunchbase Daily:

Kabbage raises $250M from SoftBank

  • Another day, another massive SoftBank investment. This time the recipient is Kabbage, an online small business loan provider that just secured $250 million in a SoftBank-funded equity financing. To date, eight-year-old, Atlanta-based Kabbage has raised more than $500 million in equity funding.

DigiCert to buy Symantec division

  • Symantec is selling its website security division to DigiCert, an authentication technology provider controlled by private equity firm Thoma Bravo. Under terms of the deal, DigiCert will pay $950 million upfront, with Symantec retaining a 30 percent stake in the combined business.

Outsourcing startups draw VCs

  • Startups can’t do everything on their own. So, it’s not surprising to see the business of helping businesses drawing interest from VCs. Since 2014, investors have poured more than $460 million into US-based outsourcing startups, according to a Crunchbase News analysis. (For more stories, follow @crunchbasenews on Twitter and check us out on Facebook.)

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